In your own words, how would an organization implement an Internal Audit function that was being outsourced since establishment?

Aprilth,

Establishing new Internal Audit Unit:

As an introduction, we need to know why Internal Audit function is important for any company.

The answer is the following:

Internal Audit Function helps the company in:

1) Making sure that company operating and financial activities are compliant with internal predefined policies and procedures as well as other government’s laws & regulations.

2) Ensuring the efficiency & effectiveness of operations and safeguard of company assets.

3) Assessing controls and making sure that they are operational and sufficient to mitigate risks.

4) Spotting errors and any inadequacies during normal course of operations.

Other activities that internal audit can do:

1) Internal audit role should include evaluation of revenue, growth and cost monitoring in addition to initiation of cost reduction initiatives. Monitoring performance of budgeted figures versus actual should also be one of internal audit tasks.

2) Internal Audit can also play pivotal consultation role by advising the management on all business related matters.

How to establish internal audit section:

1) Chief Audit Executive (CAE) or Internal Audit Manager reports directly to the Board of Directors through its audit committee in order to maintain his role independently from the executive management and also to give him a power of the board to execute his assignments/duties and obtaining necessary documents and help from employees to achieve his role.

2) Internal audit function should get full support from the management and board of directors which can be achieved by stating and emphasizing the importance of internal audit role in achieving company’s financial and non-financial objectives.

3) Well-equipped and trained staff should be hired to perform internal audit work.

4) Full coordination between internal audit team and other segments of the business is required as internal audit should assume a consulting role to all parties of the business.